The future of app marketing: Shifting from a B2C to B2B2C model
Editor's note: The following is a guest post from Daphna Steinmetz, CTO at Digital Turbine.
Mobile app developers are facing a tough challenge. As comScore pointed out, consumers spend about half of their time with digital media using smartphone apps, but they're far less likely than they once were to download new ones. In fact, half of all U.S. smartphone users download zero apps per month. That's just bad news for companies introducing killer apps into the market.
The mobile app community's response — often driven by KPIs set by their investors — has been to ramp up new user acquisition marketing budgets. But with the combination of consumer reluctance, rampant fraud and the burden of managing endless intermediaries in the marketing funnel, I can't help but wonder if the time has come to reconsider the B2C selling model.
I believe it is, and I believe that the mobile app market should look to the consumer packaged goods industry and shopper marketing for inspiration. The entire CPG industry is built on a B2B2C selling model: brands make products that are distributed via retail outlets. This model requires CPG brands to nurture relationships with retailers so they'll both carry their products and promote them in their stores. Shelf placement has a huge impact on customer discovery and is often the most effective way to prompt customers to try new brands and products. This model works well because the retailers obviously enjoy significant benefits when their customers buy their partners' products.
So will a similar model work for mobile apps? The answer must begin with an honest look at the B2C model app developers currently rely on. In addition to the rampant fraud in user-acquisition campaigns, mobile app developers face steep competition in app stores, which have inventories of at least two million apps to choose from. Many spend vast sums hiring consultants to get their app store rankings up, but how is that helping the ecosystem?
Next question: who are the distributors in the B2B2C model for mobile apps? In this scenario, the "shelves" are the smartphones and tablets that consumers use to engage with an app, and the "distributors" are the mobile app operators. But that's just the start. Smart TVs, home systems, car systems and even connected refrigerators already use apps. This list of IoT devices will continue to expand, all of which continuously become more potential "shelves" to showcase developers' apps. This fact alone is cause enough for developers to rethink their marketing model. After all, if you make a game for kids, why wouldn't you want that as part of a car system?
While the B2B2C model works well for consumer goods because retailers benefit from sales, will the model benefit the distributors in the mobile device/IoT world?
To find out, I talked to Iri Zohar, CEO of Freshub, a company that promotes the concept of a "connected kitchen." Freshub works with device manufacturers and grocers to provide online shopping straight from, say, a smart refrigerator. I asked Zohar if the device manufacturers are able to monetize those screens. His response was telling: "These screens provide a direct link from the consumer to the grocer's digital cart. More importantly, that connection occurs at the most opportune time — when consumers realize they need or want an item. You can't imagine more valuable real estate for a grocer." One can easily imagine the competition for screen space, which ultimately leads to monetization opportunities
And that's just the start. Imagine a world where a mobile developer creates added features that are exclusive to Samsung devices, for example, as part of a marketing arrangement that has both Samsung's and the app developer's long-term interests at heart. Samsung users who like those special features will be loathed to try a new brand. This scenario can add a whole new dimension to the consumer's device-selection process.
Of course, this will take a significant switch in thinking for mobile app developers, who are accustomed to sending budgets to affiliate networks and letting them find their new users. They'll need to hire a different kind of marketer, one with B2B experience, and they'll need to find ways to add value to the distributors. These are steep learning curves to be sure, but ultimately, it's likely the smart way to go.